Minnesota Session Laws - 1991, Regular Session

  

                         Laws of Minnesota 1991 

                        CHAPTER 171-H.F.No. 154 
           An act relating to the Uniform Commercial Code; 
          enacting conforming amendments proposed by the Uniform 
          Laws Conference; proposing changes to articles 
          relating to leases and bulk sales; amending Minnesota 
          Statutes 1990, sections 336.1-105; 336.2-403; 
          336.2A-103; 336.2A-209; 336.2A-303; 336.2A-304; 
          336.2A-307; 336.2A-309; 336.2A-407; 336.2A-501; 
          336.2A-503; 336.2A-507; 336.2A-508; 336.2A-516; 
          336.2A-517; 336.2A-518; 336.2A-519; 336.2A-523; 
          336.2A-525; 336.2A-527; 336.2A-528; 336.2A-529; 
          proposing coding for new law in Minnesota Statutes, 
          chapter 336; repealing Minnesota Statutes 1990, 
          sections 336.6-101 to 336.6-111; and 336.9-111. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1
AMENDMENTS TO UNIFORM COMMERCIAL CODE
ARTICLE 2A (LEASES)
    Section 1.  Minnesota Statutes 1990, section 336.2A-103, is 
amended to read: 
    336.2A-103 [DEFINITIONS AND INDEX OF DEFINITIONS.] 
    (1) In this article unless the context otherwise requires: 
    (a) "Buyer in ordinary course of business" means a person 
who in good faith and without knowledge that the sale is in 
violation of the ownership rights or security interest or 
leasehold interest of a third party in the goods, buys in 
ordinary course from a person in the business of selling goods 
of that kind but does not include a pawnbroker.  "Buying" may be 
for cash or by exchange of other property or on secured or 
unsecured credit and includes receiving goods or documents of 
title under a preexisting contract for sale but does not include 
a transfer in bulk or as security for or in total or partial 
satisfaction of a money debt. 
    (b) "Cancellation" occurs when either party puts an end to 
the lease contract for default by the other party. 
    (c) "Commercial unit" means a unit of goods that by 
commercial usage is a single whole for purposes of lease and 
division of which materially impairs its character or value on 
the market or in use.  A commercial unit may be a single 
article, as a machine, or a set of articles, as a suite of 
furniture or a line of machinery, or a quantity, as a gross or 
carload, or any other unit treated in use or in the relevant 
market as a single whole. 
    (d) "Conforming" goods or performance under a lease 
contract means goods or performance that are in accordance with 
the obligations under the lease contract. 
    (e) "Consumer lease" means a lease that a lessor regularly 
engaged in the business of leasing or selling makes to a lessee, 
except an organization, who is an individual and who takes under 
the lease primarily for a personal, family, or household 
purpose, if the total payments to be made under the lease 
contract, excluding payments for options to renew or buy, do not 
exceed $25,000. 
    (f) "Fault" means wrongful act, omission, breach, or 
default. 
    (g) "Finance lease" means a lease in which 
    (1) the lessor does not select, manufacture, or supply the 
goods, 
    (2) the lessor acquires the goods or the right to 
possession and use of the goods in connection with the lease, 
and 
    (3) either 
    (i) the lessee receives a copy of the contract evidencing 
the lessor's purchase of the goods or a disclaimer statement on 
or before signing the lease contract, or 
    (ii) the lessee's approval of the contract evidencing the 
lessor's purchase of the goods or a disclaimer statement is a 
condition to effectiveness of the lease contract.  
    "Disclaimer statement" means a written statement that is 
part of or separate from the lease contract that discloses all 
warranties and other rights provided to the lessee by the lessor 
and supplier in connection with the lease contract and informs 
the lessee in a conspicuous manner that there are no warranties 
or other rights provided to the lessee by the lessor and 
supplier other than those disclosed in the statement. 
    (h) "Goods" means all things that are movable at the time 
of identification to the lease contract, or are fixtures 
(section 336.2A-309), but the term does not include money, 
documents, instruments, accounts, chattel paper, general 
intangibles, or minerals or the like, including oil and gas, 
before extraction.  The term also includes the unborn young of 
animals. 
    (i) "Installment lease contract" means a lease contract 
that authorizes or requires the delivery of goods in separate 
lots to be separately accepted, even though the lease contract 
contains a clause "each delivery is a separate lease" or its 
equivalent. 
    (j) "Lease" means a transfer of the right to possession and 
use of goods for a term in return for consideration, but a sale, 
including a sale on approval or a sale or return, or retention 
or creation of a security interest is not a lease.  Unless the 
context clearly indicates otherwise, the term includes a 
sublease. 
      (k) "Lease agreement" means the bargain, with respect to 
the lease, of the lessor and the lessee in fact as found in 
their language or by implication from other circumstances 
including course of dealing or usage of trade or course of 
performance as provided in this article.  Unless the context 
clearly indicates otherwise, the term includes a sublease 
agreement. 
     (l) "Lease contract" means the total legal obligation that 
results from the lease agreement as affected by this article and 
any other applicable rules of law.  Unless the context clearly 
indicates otherwise, the term includes a sublease contract. 
      (m) "Leasehold interest" means the interest of the lessor 
or the lessee under a lease contract. 
      (n) "Lessee" means a person who acquires the right to 
possession and use of goods under a lease.  Unless the context 
clearly indicates otherwise, the term includes a sublessee. 
      (o) "Lessee in ordinary course of business" means a person 
who in good faith and without knowledge that the lease is in 
violation of the ownership rights or security interest or 
leasehold interest of a third party in the goods leases in 
ordinary course from a person in the business of selling or 
leasing goods of that kind but does not include a pawnbroker.  
"Leasing" may be for cash or by exchange of other property or on 
secured or unsecured credit and includes receiving goods or 
documents of title under a preexisting lease contract but does 
not include a transfer in bulk or as security for or in total or 
partial satisfaction of a money debt. 
      (p) "Lessor" means a person who transfers the right to 
possession and use of goods under a lease.  Unless the context 
clearly indicates otherwise, the term includes a sublessor. 
      (q) "Lessor's residual interest" means the lessor's 
interest in the goods after expiration, termination, or 
cancellation of the lease contract. 
     (r) "Lien" means a charge against or interest in goods to 
secure payment of a debt or performance of an obligation, but 
the term does not include a security interest. 
      (s) "Lot" means a parcel or a single article that is the 
subject matter of a separate lease or delivery, whether or not 
it is sufficient to perform the lease contract. 
      (t) "Merchant lessee" means a lessee that is a merchant 
with respect to goods of the kind subject to the lease. 
      (u) "Present value" means the amount as of a date certain 
of one or more sums payable in the future, discounted to the 
date certain.  The discount is determined by the interest rate 
specified by the parties if the rate was not manifestly 
unreasonable at the time the transaction was entered into; 
otherwise, the discount is determined by a commercially 
reasonable rate that takes into account the facts and 
circumstances of each case at the time the transaction was 
entered into. 
      (v) "Purchase" includes taking by sale, lease, mortgage, 
security interest, pledge, gift, or any other voluntary 
transaction creating an interest in goods. 
     (w) "Sublease" means a lease of goods the right to 
possession and use of which was acquired by the lessor as a 
lessee under an existing lease. 
     (x) "Supplier" means a person from whom a lessor buys or 
leases goods to be leased under a finance lease. 
     (y) "Supply contract" means a contract under which a lessor 
buys or leases goods to be leased. 
     (z) "Termination" occurs when either party pursuant to a 
power created by agreement or law puts an end to the lease 
contract otherwise than for default. 
     (2) Other definitions applying to this article and the 
sections in which they appear are: 
     "Accessions."  Section 336.2A-310(1). 
    "Construction mortgage."  Section 336.2A-309(1)(d). 
    "Encumbrance."  Section 336.2A-309(1)(e). 
    "Fixtures."  Section 336.2A-309(1)(a). 
    "Fixture filing."  Section 336.2A-309(1)(b). 
    "Purchase money lease."  Section 336.2A-309(1)(c). 
    (3) The following definitions in other articles apply to 
this article: 
    "Accounts Account."  Section 336.9-106. 
    "Between merchants."  Section 336.2-104(3). 
    "Buyer."  Section 336.2-103(1)(a). 
    "Chattel paper."  Section 336.9-105(1)(b). 
    "Consumer goods."  Section 336.9-109(1). 
    "Documents Document."  Section 336.9-105(1)(f). 
    "Entrusting."  Section 336.2-403(3). 
    "General intangibles."  Section 336.9-106. 
    "Good faith."  Section 336.2-103(1)(b). 
    "Instruments Instrument."  Section 336.9-105(1)(i). 
    "Merchant."  Section 336.2-104(1). 
    "Mortgage."  Section 336.9-105(1)(j). 
    "Pursuant to commitment."  Section 336.9-105(1)(k). 
    "Receipt."  Section 336.2-103(1)(c). 
    "Sale."  Section 336.2-106(1). 
    "Sale on approval."  Section 336.2-326. 
    "Sale or return."  Section 336.2-326. 
    "Seller."  Section 336.2-103(1)(d). 
    (4) In addition, sections 336.1-101 to 336.1-109 contain 
general definitions and principles of construction and 
interpretation applicable throughout this article. 
    Sec. 2.  Minnesota Statutes 1990, section 336.2A-209, is 
amended to read: 
    336.2A-209 [LESSEE UNDER FINANCE LEASE AS BENEFICIARY OF 
SUPPLY CONTRACT.] 
    (1) The benefit of the a supplier's promises to the lessor 
under the supply contract and of all warranties, whether express 
or implied, under including those of any third party provided in 
connection with or as part of the supply contract, extends to 
the lessee to the extent of the lessee's leasehold interest 
under a finance lease related to the supply contract, but is 
subject to the terms of the warranty and of the supply contract 
and all of the supplier's defenses or claims arising from the 
supply contract. 
    (2) The extension of the benefit of the a supplier's 
promises and of warranties to the lessee (section 336.2A-209(1)) 
does not:  (a) (i) modify the rights and obligations of the 
parties to the supply contract, whether arising from the supply 
contract or otherwise, or (b) (ii) impose any duty or liability 
under the supply contract on the lessee. 
    (3) Any modification or rescission of the supply contract 
by the supplier and the lessor is effective against between the 
supplier and the lessee unless, prior to before the modification 
or rescission, the supplier has received notice that the lessee 
has entered into a finance lease related to the supply 
contract.  If the supply contract is modified or rescinded after 
the lessee enters the finance lease, the lessee has a cause of 
action against the lessor, and against the supplier if the 
supplier has notice of the lessee's entering the finance lease 
when the supply contract is modified or rescinded.  The lessee's 
recovery from such action shall put the lessee in as good a 
position as if the modification or rescission had not occurred.  
If the modification or rescission is effective between the 
supplier and the lessee, the lessor is deemed to have assumed, 
in addition to the obligations of the lessor to the lessee under 
the lease contract, promises of the supplier to the lessor and 
warranties that were so modified or rescinded as they existed 
and were available to the lessee before modification or 
rescission.  
    (4) In addition to the extension of the benefit of the 
supplier's promises and of warranties to the lessee under 
subsection (1), the lessee retains all rights that the lessee 
may have against the supplier that arise from an agreement 
between the lessee and the supplier or under other law. 
    Sec. 3.  Minnesota Statutes 1990, section 336.2A-303, is 
amended to read: 
    336.2A-303 [ALIENABILITY OF PARTY'S INTEREST UNDER LEASE 
CONTRACT OR OF LESSOR'S RESIDUAL INTEREST IN GOODS; DELEGATION 
OF PERFORMANCE; ASSIGNMENT TRANSFER OF RIGHTS.] 
    (1) Any interest of a party under a lease contract and the 
lessor's residual interest in the goods may be transferred 
unless 
    (a) the transfer is voluntary and the lease contract 
prohibits the transfer; or 
    (b) the transfer materially changes the duty of or 
materially increases the burden or risk imposed on the other 
party to the lease contract, and within a reasonable time after 
notice of the transfer the other party demands that the 
transferee comply with subsection (2) and the transferee fails 
to comply. 
    (2) Within a reasonable time after demand pursuant to 
subsection (1)(b), the transferee shall: 
    (a) cure or provide adequate assurance that the transferee 
will promptly cure any default other than one arising from the 
transfer; 
    (b) compensate or provide adequate assurance that the 
transferee will promptly compensate the other party to the lease 
contract and any other person holding an interest in the lease 
contract, except the party whose interest is being transferred, 
for any loss to that party resulting from the transfer; 
    (c) provide adequate assurance of future due performance 
under the lease contract; and 
    (d) assume the lease contract. 
    (3) Demand pursuant to subsection (1)(b) is without 
prejudice to the other party's rights against the transferee and 
the party whose interest is transferred. 
     (1) As used in this section, "creation of a security 
interest" includes the sale of a lease contract that is subject 
to article 9, secured transactions, by reason of section 
336.9-102(1)(b). 
     (2) Except as provided in subsections (3) and (4), a 
provision in a lease agreement that (i) prohibits the voluntary 
or involuntary transfer, including a transfer by sale, sublease, 
creation or enforcement of a security interest, or attachment, 
levy, or other judicial process, of an interest of a party under 
the lease contract or of the lessor's residual interest in the 
goods, or (ii) makes the transfer an event of default, gives 
rise to the rights and remedies provided in subsection (5), but 
a transfer that is prohibited or is an event of default under 
the lease agreement is otherwise effective. 
    (3) A provision in a lease agreement that (i) prohibits the 
creation or enforcement of a security interest in an interest of 
a party under the lease contract or in the lessor's residual 
interest in the goods, or (ii) makes the transfer an event of 
default, is not enforceable unless, and then only to the extent 
that, there is an actual transfer by the lessee of the lessee's 
right of possession or use of the goods in violation of the 
provision or an actual delegation of a material performance of 
either party to the lease contract in violation of the 
provision.  Neither the granting nor the enforcement of a 
security interest in (i) the lessor's interest under the lease 
contract or (ii) the lessor's residual interest in the goods is 
a transfer that materially impairs the prospect of obtaining 
return performance by, materially changes the duty of, or 
materially increases the burden or risk imposed on, the lessee 
within the purview of subsection (5) unless, and then only to 
the extent that, there is an actual delegation of a material 
performance of the lessor. 
    (4) An assignment of "the lease" or of "all my rights under 
the lease" or an assignment in similar general terms is a 
transfer of rights, and unless the language or the 
circumstances, as in an assignment for security, indicate the 
contrary, the assignment is a delegation of duties by the 
assignor to the assignee and acceptance by the assignee 
constitutes a promise by the assignee to perform those duties.  
This promise is enforceable by either the assignor or the other 
party to the lease contract. A provision in a lease agreement 
that (i) prohibits a transfer of a right to damages for default 
with respect to the whole lease contract or of a right to 
payment arising out of the transferor's due performance of the 
transferor's entire obligation, or (ii) makes the transfer an 
event of default, is not enforceable, and the transfer is not a 
transfer that materially impairs the prospect of obtaining 
return performance by, materially changes the duty of, or 
materially increases the burden or risk imposed on, the other 
party to the lease contract within the purview of subsection (5).
    (5) Subject to subsections (3) and (4):  
    (a) if a transfer is made that is made an event of default 
under a lease agreement, the party to the lease contract not 
making the transfer, unless that party waives the default or 
otherwise agrees, has the rights and remedies described in 
section 336.2A-501(2); 
     (b) if paragraph (a) is not applicable and if a transfer is 
made that (i) is prohibited under a lease agreement or (ii) 
materially impairs the prospect of obtaining return performance 
by, materially changes the duty of, or materially increases the 
burden or risk imposed on, the other party to the lease 
contract, unless the party not making the transfer agrees at any 
time to the transfer in the lease contract or otherwise, then, 
except as limited by contract, (i) the transferor is liable to 
the party not making the transfer for damages caused by the 
transfer to the extent that the damages could not reasonably be 
prevented by the party not making the transfer and (ii) a court 
having jurisdiction may grant other appropriate relief, 
including cancellation of the lease contract or an injunction 
against the transfer. 
     (6) A transfer of "the lease" or of "all my rights under 
the lease," or a transfer in similar general terms, is a 
transfer of rights and, unless the language or the 
circumstances, as in a transfer for security, indicate the 
contrary, the transfer is a delegation of duties by the 
transferor to the transferee.  Acceptance by the transferee 
constitutes a promise by the transferee to perform those 
duties.  The promise is enforceable by either the transferor or 
the other party to the lease contract. 
    (5) (7) Unless otherwise agreed by the lessor and the 
lessee, no a delegation of performance relieves does not relieve 
the assignor transferor as against the other party of any duty 
to perform or of any liability for default. 
    (6) A right to damages for default with respect to the 
whole lease contract or a right arising out of the assignor's 
due performance of the assignor's entire obligation can be 
assigned despite agreement otherwise. 
    (7) (8) In a consumer lease, to prohibit the transfer of an 
interest of a party under a the lease contract or to make a 
transfer an event of default, the language of prohibition must 
be specific, by a writing, and conspicuous. 
    Sec. 4.  Minnesota Statutes 1990, section 336.2A-304, is 
amended to read: 
    336.2A-304 [SUBSEQUENT LEASE OF GOODS BY LESSOR.] 
    (1) Subject to the provisions of section 336.2A-303, a 
subsequent lessee from a lessor of goods under an existing lease 
contract obtains, to the extent of the leasehold interest 
transferred, the leasehold interest in the goods that the lessor 
had or had power to transfer, and except as provided in 
subsection (2) and section 336.2A-527(4), takes subject to the 
existing lease contract.  A lessor with voidable title has power 
to transfer a good leasehold interest to a good faith subsequent 
lessee for value but only to the extent set forth in the 
preceding sentence.  When If goods have been delivered under a 
transaction of purchase, the lessor has that power even though: 
    (a) the lessor's transferor was deceived as to the identity 
of the lessor; 
    (b) the delivery was in exchange for a check which is later 
dishonored; 
    (c) it was agreed that the transaction was to be a "cash 
sale"; or 
    (d) the delivery was procured through fraud punishable as 
larcenous under the criminal law. 
    (2) If a lessee has entrusted leased goods to the lessee's 
lessor who is a merchant dealing in goods of that kind, a 
subsequent lessee from that lessor under a lease entered into 
after the entrustment and in the ordinary course of business 
takes those goods free of the existing lease contract and 
obtains, to the extent of the leasehold interest transferred, 
all of the lessor's and the earlier lessee's rights to the goods.
    (3) A subsequent lessee from the lessor of goods that are 
subject to an existing lease contract and are covered by a 
certificate of title issued under a statute of this state or of 
another jurisdiction takes no greater rights than those provided 
both by this section and by the certificate of title statute. 
    Sec. 5.  Minnesota Statutes 1990, section 336.2A-307, is 
amended to read: 
    336.2A-307 [PRIORITY OF LIENS ARISING BY ATTACHMENT OR LEVY 
ON, SECURITY INTERESTS IN, AND OTHER CLAIMS TO GOODS.] 
    (1) Except as otherwise provided in section 336.2A-306, a 
creditor of a lessee takes subject to the lease contract. 
    (2) Except as otherwise provided in subsections (3) and (4) 
and in sections 336.2A-306 and 336.2A-308, a creditor of a 
lessor takes subject to the lease contract unless: 
    (a) unless the creditor holds a lien that attached to the 
goods before the lease contract became enforceable, or; 
    (b) unless the creditor holds a security interest in the 
goods that under the article on secured transactions (article 9) 
would have priority over any other security interest in the 
goods perfected by a filing covering the goods and made at the 
time the lease contract became enforceable, whether or not any 
other security interest existed. and the lessee did not give 
value and receive delivery of the goods without knowledge of the 
security interest; or 
    (c) the creditor holds a security interest in the goods 
which was perfected (section 336.9-303) before the lease 
contract became enforceable. 
    (3) A lessee in the ordinary course of business takes the 
leasehold interest free of a security interest in the goods 
created by the lessor even though the security interest is 
perfected (section 336.9-303) and the lessee knows of its 
existence. 
    (4) A lessee other than a lessee in the ordinary course of 
business takes the leasehold interest free of a security 
interest to the extent that it secures future advances made 
after the secured party acquires knowledge of the lease or more 
than 45 days after the lease contract becomes enforceable, 
whichever first occurs, unless the future advances are made 
pursuant to a commitment entered into without knowledge of the 
lease and before the expiration of the 45-day period. 
    Sec. 6.  Minnesota Statutes 1990, section 336.2A-309, is 
amended to read: 
    336.2A-309 [LESSOR'S AND LESSEE'S RIGHTS WHEN GOODS BECOME 
FIXTURES.] 
    (1) In this section: 
    (a) goods are "fixtures" when they become so related to 
particular real estate that an interest in them arises under 
real estate law; 
    (b) a "fixture filing" is the filing, in the office where a 
mortgage on the real estate would be filed or recorded or 
registered, of a financing statement concerning covering goods 
that are or are to become fixtures and conforming to the 
requirements of subsection (5) of section 336.9-402 
336.9-402(5); 
    (c) a lease is a "purchase money lease" unless the lessee 
has possession or use of the goods or the right to possession or 
use of the goods before the lease agreement is enforceable; 
    (d) a mortgage is a "construction mortgage" to the extent 
it secures an obligation incurred for the construction of an 
improvement on land including the acquisition cost of the land, 
if the recorded writing so indicates; and 
    (e) "encumbrance" includes real estate mortgages and other 
liens on real estate and all other rights in real estate that 
are not ownership interests. 
    (2) Under this article a lease may be of goods that are 
fixtures or may continue in goods that become fixtures, but no 
lease exists under this article of ordinary building materials 
incorporated into an improvement on land. 
      (3) This article does not prevent creation of a lease of 
fixtures pursuant to real estate law. 
      (4) The perfected interest of a lessor of fixtures has 
priority over a conflicting interest of an encumbrancer or owner 
of the real estate if: 
      (a) the lease is a purchase money lease, the conflicting 
interest of the encumbrancer or owner arises before the goods 
become fixtures, the interest of the lessor is perfected by a 
fixture filing before the goods become fixtures or within ten 
days after that, and the lessee has an interest of record in the 
real estate or is in possession of the real estate; or 
      (b) the interest of the lessor is perfected by a fixture 
filing before the interest of the encumbrancer or owner is of 
record, the lessor's interest has priority over any conflicting 
interest of a predecessor in title of the encumbrancer or owner, 
and the lessee has an interest of record in the real estate or 
is in possession of the real estate. 
      (5) The interest of a lessor of fixtures, whether or not 
perfected, has priority over the conflicting interest of an 
encumbrancer or owner of the real estate if: 
      (a) the fixtures are readily removable factory or office 
machines, readily removable equipment that is not primarily used 
or leased for use in the operation of the real estate, or 
readily removable replacements of domestic appliances that are 
goods subject to a consumer lease, and before the goods become 
fixtures the lease contract is enforceable; or 
    (b) the conflicting interest is a lien on the real estate 
obtained by legal or equitable proceedings after the lease 
contract is enforceable; or 
    (c) the encumbrancer or owner has consented in writing to 
the lease or has disclaimed an interest in the goods as 
fixtures; or 
    (d) the lessee has a right to remove the goods as against 
the encumbrancer or owner.  If the lessee's right to remove 
terminates, the priority of the interest of the lessor continues 
for a reasonable time. 
    (6) Notwithstanding paragraph (a) of subsection (4) (4)(a) 
but otherwise subject to subsections (4) and (5), the interest 
of a lessor of fixtures, including the lessor's residual 
interest, is subordinate to the conflicting interest of an 
encumbrancer of the real estate under a construction mortgage 
recorded before the goods become fixtures if the goods become 
fixtures before the completion of the construction.  To the 
extent given to refinance a construction mortgage, the 
conflicting interest of an encumbrancer of the real estate under 
a mortgage has this priority to the same extent as the 
encumbrancer of the real estate under the construction mortgage. 
    (7) In cases not within the preceding subsections, priority 
between the interest of a lessor of fixtures, including the 
lessor's residual interest, and the conflicting interest of an 
encumbrancer or owner of the real estate who is not the lessee 
is determined by the priority rules governing conflicting 
interests in real estate. 
    (8) If the interest of a lessor of fixtures, including the 
lessor's residual interest, has priority over all conflicting 
interests of all owners and encumbrancers of the real estate, 
the lessor or the lessee may:  (a) (i) on default, expiration, 
termination, or cancellation of the lease agreement by the other 
party but subject to the provisions of the lease agreement and 
this article, or (b) (ii) if necessary to enforce the lessor's 
or lessee's other rights and remedies under this article; remove 
the goods from the real estate, free and clear of all 
conflicting interests of all owners and encumbrancers of the 
real estate, but the lessor or lessee must reimburse any 
encumbrancer or owner of the real estate who is not the lessee 
and who has not otherwise agreed for the cost of repair of any 
physical injury, but not for any diminution in value of the real 
estate caused by the absence of the goods removed or by any 
necessity of replacing them.  A person entitled to reimbursement 
may refuse permission to remove until the party seeking removal 
gives adequate security for the performance of this obligation. 
    (9) Even though the lease agreement does not create a 
security interest, the interest of a lessor of fixtures, 
including the lessor's residual interest, is perfected by filing 
a financing statement as a fixture filing for leased goods that 
are or are to become fixtures in accordance with the relevant 
provisions of the Article on Secured Transactions (article 9). 
    Sec. 7.  [336.2A-311] [PRIORITY SUBJECT TO SUBORDINATION.] 
    Nothing in this article prevents subordination by agreement 
by any person entitled to priority. 
    Sec. 8.  Minnesota Statutes 1990, section 336.2A-407, is 
amended to read: 
    336.2A-407 [IRREVOCABLE PROMISES:  FINANCE LEASES.] 
    (1) In the case of a finance lease, the lessee's promises 
under the lease contract become irrevocable and independent upon 
the lessee's acceptance of the goods. 
    (2) A promise that has become irrevocable and independent 
under subsection (1): 
    (a) is effective and enforceable between the parties, and 
by or against third parties including assignees of the parties; 
and 
    (b) is not subject to cancellation, termination, 
modification, repudiation, excuse, or substitution without the 
consent of the party to whom the promise runs. 
    (3) This section does not affect the validity under any 
other law of a covenant in any lease contract making the 
lessee's promises irrevocable and independent upon the lessee's 
acceptance of the goods. 
    Sec. 9.  Minnesota Statutes 1990, section 336.2A-501, is 
amended to read: 
    336.2A-501 [DEFAULT:  PROCEDURE.] 
    (1) Whether the lessor or the lessee is in default under a 
lease contract is determined by the lease agreement and this 
article. 
    (2) If the lessor or the lessee is in default under the 
lease contract, the party seeking enforcement has rights and 
remedies as provided in this article and, except as limited by 
this article, as provided in the lease agreement. 
    (3) If the lessor or the lessee is in default under the 
lease contract, the party seeking enforcement may reduce the 
party's claim to judgment, or otherwise enforce the lease 
contract by self-help or any available judicial procedure or 
nonjudicial procedure, including administrative proceeding, 
arbitration, or the like, in accordance with this article. 
    (4) Except as otherwise provided in section 336.1-106(1) or 
this article or the lease agreement, the rights and remedies 
referred to in subsections (2) and (3) are cumulative. 
    (5) If the lease agreement covers both real property and 
goods, the party seeking enforcement may proceed under this part 
as to the goods, or under other applicable law as to both the 
real property and the goods in accordance with the that party's 
rights and remedies in respect of the real property, in which 
case this part does not apply. 
    Sec. 10.  Minnesota Statutes 1990, section 336.2A-503, is 
amended to read: 
    336.2A-503 [MODIFICATION OR IMPAIRMENT OF RIGHTS AND 
REMEDIES.] 
    (1) Except as otherwise provided in this article, the lease 
agreement may include rights and remedies for default in 
addition to or in substitution for those provided in this 
article and may limit or alter the measure of damages 
recoverable under this article. 
    (2) Resort to a remedy provided under this article or in 
the lease agreement is optional unless the remedy is expressly 
agreed to be exclusive.  If circumstances cause an exclusive or 
limited remedy to fail of its essential purpose, or provision 
for an exclusive remedy is unconscionable, remedy may be had as 
provided in this article. 
    (3) Consequential damages may be liquidated under section 
336.2A-504, or may otherwise be limited, altered, or excluded 
unless the limitation, alteration, or exclusion is 
unconscionable.  Limitation, alteration, or exclusion of 
consequential damages for injury to the person in the case of 
consumer goods is prima facie unconscionable but limitation, 
alteration, or exclusion of damages where the loss is commercial 
is not prima facie unconscionable. 
    (4) Rights and remedies on default by the lessor or the 
lessee with respect to any obligation or promise collateral or 
ancillary to the lease contract are not impaired by this article.
     Sec. 11.  Minnesota Statutes 1990, section 336.2A-507, is 
amended to read: 
    336.2A-507 [PROOF OF MARKET RENT:  TIME AND PLACE.] 
    (1) Damages based on market rent (section 336.2A-519 or 
336.2A-528) are determined according to the rent for the use of 
the goods concerned for a lease term identical to the remaining 
lease term of the original lease agreement and prevailing at the 
time of the default times specified in sections 336.2A-519 and 
336.2A-528. 
    (2) If evidence of rent for the use of the goods concerned 
for a lease term identical to the remaining lease term of the 
original lease agreement and prevailing at the times or places 
described in this article is not readily available, the rent 
prevailing within any reasonable time before or after the time 
described or at any other place or for a different lease term 
which in commercial judgment or under usage of trade would serve 
as a reasonable substitute for the one described may be used, 
making any proper allowance for the difference, including the 
cost of transporting the goods to or from the other place. 
    (3) Evidence of a relevant rent prevailing at a time or 
place or for a lease term other than the one described in this 
article offered by one party is not admissible unless and until 
the party has given the other party notice the court finds 
sufficient to prevent unfair surprise. 
    (4) If the prevailing rent or value of any goods regularly 
leased in any established market is in issue, reports in 
official publications or trade journals or in newspapers or 
periodicals of general circulation published as the reports of 
that market are admissible in evidence.  The circumstances of 
the preparation of the report may be shown to affect its weight 
but not its admissibility. 
    Sec. 12.  Minnesota Statutes 1990, section 336.2A-508, is 
amended to read: 
    336.2A-508 [LESSEE'S REMEDIES.] 
    (1) If a lessor fails to deliver the goods in conformity to 
the lease contract (section 336.2A-509) or repudiates the lease 
contract (section 336.2A-402), or a lessee rightfully rejects 
the goods (section 336.2A-509) or justifiably revokes acceptance 
of the goods (section 336.2A-517), then with respect to any 
goods involved, and with respect to all of the goods if under an 
installment lease contract the value of the whole lease contract 
is substantially impaired (section 336.2A-510), the lessor is in 
default under the lease contract and the lessee may pursue any 
or all of the following remedies: 
    (a) cancel the lease contract (section 336.2A-505(1)); 
    (b) recover so much of the rent and security as has been 
paid, but in the case of an installment lease contract the 
recovery is that which and is just under the circumstances; 
    (c) cover and recover damages as to all goods affected 
whether or not they have been identified to the lease contract 
(sections 336.2A-518 and 336.2A-520), or recover damages for 
nondelivery (sections 336.2A-519 and 336.2A-520); 
    (d) exercise any other rights or pursue any other remedies 
provided in the lease contract. 
    (2) If a lessor fails to deliver the goods in conformity to 
the lease contract or repudiates the lease contract, the lessee 
may also: 
    (a) if the goods have been identified, recover them 
(section 336.2A-522); or 
    (b) in a proper case, obtain specific performance or 
replevy the goods (section 336.2A-521). 
    (3) If a lessor is otherwise in default under a lease 
contract, the lessee may exercise the rights and pursue the 
remedies provided in the lease contract, which may include a 
right to cancel the lease, and this article in section 
336.2A-519(3). 
    (4) If a lessor has breached a warranty, whether express or 
implied, the lessee may recover damages (section 336.2A-519(4)). 
    (5) On rightful rejection or justifiable revocation of 
acceptance, a lessee has a security interest in goods in the 
lessee's possession or control for any rent and security that 
has been paid and any expenses reasonably incurred in their 
inspection, receipt, transportation, and care and custody and 
may hold those goods and dispose of them in good faith and in a 
commercially reasonable manner, subject to the provisions of 
section 336.2A-527(5). 
    (6) Subject to the provisions of section 336.2A-407, a 
lessee, on notifying the lessor of the lessee's intention to do 
so, may deduct all or any part of the damages resulting from any 
default under the lease contract from any part of the rent still 
due under the same lease contract. 
    Sec. 13.  Minnesota Statutes 1990, section 336.2A-516, is 
amended to read: 
    336.2A-516 [EFFECT OF ACCEPTANCE OF GOODS; NOTICE OF 
DEFAULT; BURDEN OF ESTABLISHING DEFAULT AFTER ACCEPTANCE; NOTICE 
OF CLAIM OR LITIGATION TO PERSON ANSWERABLE OVER.] 
    (1) A lessee must pay rent for any goods accepted in 
accordance with the lease contract, with due allowance for goods 
rightfully rejected or not delivered. 
    (2) A lessee's acceptance of goods precludes rejection of 
the goods accepted.  In the case of a finance lease, if made 
with knowledge of a nonconformity, acceptance cannot be revoked 
because of it.  In any other case, if made with knowledge of a 
nonconformity, acceptance cannot be revoked because of it unless 
the acceptance was on the reasonable assumption that the 
nonconformity would be seasonably cured.  Acceptance does not of 
itself impair any other remedy provided by this article or the 
lease agreement for nonconformity. 
    (3) If a tender has been accepted: 
    (a) within a reasonable time after the lessee discovers or 
should have discovered any default, the lessee shall notify the 
lessor and the supplier, if any, or be barred from any remedy 
against the party not notified; 
    (b) except in the case of a consumer lease, within a 
reasonable time after the lessee receives notice of litigation 
for infringement or the like (section 336.2A-211) the lessee 
shall notify the lessor or be barred from any remedy over for 
liability established by the litigation; and 
    (c) the burden is on the lessee to establish any default. 
    (4) If a lessee is sued for breach of a warranty or other 
obligation for which a lessor or a supplier is answerable 
over the following apply: 
    (a) The lessee may give the lessor or the supplier, or 
both, written notice of the litigation.  If the notice states 
that the lessor or the supplier person notified may come in and 
defend and that if the lessor or the supplier person notified 
does not do so the lessor or supplier that person will be bound 
in any action against the lessor or supplier that person by the 
lessee by any determination of fact common to the two 
litigations, then unless the lessor or the supplier person 
notified after seasonable receipt of the notice does come in and 
defend the lessor or supplier that person is so bound. 
    (b) The lessor or the supplier may demand in writing that 
the lessee turn over control of the litigation including 
settlement if the claim is one for infringement or the like 
(section 336.2A-211) or else be barred from any remedy over.  If 
the demand states that the lessor or the supplier agrees to bear 
all expense and to satisfy any adverse judgment, then unless the 
lessee after seasonable receipt of the demand does turn over 
control the lessee is so barred. 
    (5) The provisions of Subsections (3) and (4) apply to any 
obligation of a lessee to hold the lessor or the supplier 
harmless against infringement or the like (section 336.2A-211). 
    Sec. 14.  Minnesota Statutes 1990, section 336.2A-517, is 
amended to read: 
    336.2A-517 [REVOCATION OF ACCEPTANCE OF GOODS.] 
    (1) A lessee may revoke acceptance of a lot or commercial 
unit whose nonconformity substantially impairs its value to the 
lessee if the lessee has accepted it: 
    (a) except in the case of a finance lease, on the 
reasonable assumption that its nonconformity would be cured and 
it has not been seasonably cured; or 
    (b) without discovery of the nonconformity if the lessee's 
acceptance was reasonably induced either by the lessor's 
assurances or, except in the case of a finance lease, by the 
difficulty of discovery before acceptance. 
    (2) Except in the case of a finance lease, a lessee may 
revoke acceptance of a lot or commercial unit if the lessor 
defaults under the lease contract and the default substantially 
impairs the value of that lot or commercial unit to the lessee.  
    (3) If the lease agreement so provides, the lessee may 
revoke acceptance of a lot or commercial unit because of other 
defaults by the lessor.  
    (4) Revocation of acceptance must occur within a reasonable 
time after the lessee discovers or should have discovered the 
ground for it and before any substantial change in condition of 
the goods which is not caused by the nonconformity.  Revocation 
is not effective until the lessee notifies the lessor. 
    (3) (5) A lessee who so revokes has the same rights and 
duties with regard to the goods involved as if the lessee had 
rejected them. 
    Sec. 15.  Minnesota Statutes 1990, section 336.2A-518, is 
amended to read: 
    336.2A-518 [COVER; SUBSTITUTE GOODS.] 
    (1) After a default by a lessor under the lease contract 
(of the type described in section 336.2A-508(1)), or, if agreed, 
after other default by the lessor, the lessee may cover by 
making any purchase or lease of or contract to purchase or lease 
goods in substitution for those due from the lessor. 
    (2) Except as otherwise provided with respect to damages 
liquidated in the lease agreement (section 336.2A-504) or 
otherwise determined by pursuant to agreement of the parties ( 
section sections 336.1-102(3) and 336.2A-503), if a lessee's 
cover is by a lease agreement substantially similar to the 
original lease agreement and the new lease agreement is made in 
good faith and in a commercially reasonable manner, the lessee 
may recover from the lessor as damages (a) (i) the present 
value, as of the date of default the commencement of the term of 
the new lease agreement, of the difference between the total 
rent for the lease term of under the new lease agreement and 
applicable to that period of the new lease term which is 
comparable to the then remaining term of the original lease 
agreement minus the present value as of the same date of the 
total rent for the then remaining lease term of the original 
lease agreement, and (b) (ii) any incidental or consequential 
damages, less expenses saved in consequence of the lessor's 
default. 
    (3) If a lessee's cover is by lease agreement that for any 
reason does not qualify for treatment under subsection (2), or 
is by purchase or otherwise, the lessee may recover from the 
lessor as if the lessee had elected not to cover and section 
336.2A-519 governs. 
    Sec. 16.  Minnesota Statutes 1990, section 336.2A-519, is 
amended to read: 
    336.2A-519 [LESSEE'S DAMAGES FOR NONDELIVERY, REPUDIATION, 
DEFAULT, AND BREACH OF WARRANTY IN REGARD TO ACCEPTED GOODS.] 
    (1) Except as otherwise provided with respect to damages 
liquidated in the lease agreement (section 336.2A-504) or 
otherwise determined by pursuant to agreement of the parties ( 
section sections 336.1-102(3) and 336.2A-503), if a lessee 
elects not to cover or a lessee elects to cover and the cover is 
by lease agreement that for any reason does not qualify for 
treatment under section 336.2A-518(2), or is by purchase or 
otherwise, the measure of damages for nondelivery or repudiation 
by the lessor or for rejection or revocation of acceptance by 
the lessee is the present value, as of the date of the default, 
of the difference between the then market rent and minus the 
present value as of the same date of the original rent, computed 
for the remaining lease term of the original lease agreement, 
together with incidental and consequential damages, less 
expenses saved in consequence of the lessor's default. 
    (2) Market rent is to be determined as of the place for 
tender or, in cases of rejection after arrival or revocation of 
acceptance, as of the place of arrival. 
    (3) Except as otherwise agreed, if the lessee has accepted 
goods and given notification (section 336.2A-516(3)), the 
measure of damages for nonconforming tender or delivery or other 
default by a lessor is the loss resulting in the ordinary course 
of events from the lessor's default as determined in any manner 
that is reasonable together with incidental and consequential 
damages, less expenses saved in consequence of the lessor's 
default. 
    (4) Except as otherwise agreed, the measure of damages for 
breach of warranty is the present value at the time and place of 
acceptance of the difference between the value of the use of the 
goods accepted and the value if they had been as warranted for 
the lease term, unless special circumstances show proximate 
damages of a different amount, together with incidental and 
consequential damages, less expenses saved in consequence of the 
lessor's default or breach of warranty. 
    Sec. 17.  Minnesota Statutes 1990, section 336.2A-523, is 
amended to read: 
    336.2A-523 [LESSOR'S REMEDIES.] 
    (1) If a lessee wrongfully rejects or revokes acceptance of 
goods or fails to make a payment when due or repudiates with 
respect to a part or the whole, then, with respect to any goods 
involved, and with respect to all of the goods if under an 
installment lease contract the value of the whole lease contract 
is substantially impaired (section 336.2A-510), the lessee is in 
default under the lease contract and the lessor may pursue any 
or all of the following remedies: 
    (a) cancel the lease contract (section 336.2A-505(1)); 
    (b) proceed respecting goods not identified to the lease 
contract (section 336.2A-524); 
    (c) withhold delivery of the goods and take possession of 
goods previously delivered (section 336.2A-525); 
    (d) stop delivery of the goods by any bailee (section 
336.2A-526); 
    (e) dispose of the goods and recover damages (section 
336.2A-527), or retain the goods and recover damages (section 
336.2A-528), or in a proper case recover rent (section 
336.2A-529); 
    (f) exercise any other rights or pursue any other remedies 
provided in the lease contract.  
    (2) If a lessor does not fully exercise a right or obtain a 
remedy to which the lessor is entitled under subsection (1), the 
lessor may recover the loss resulting in the ordinary course of 
events from the lessee's default as determined in any reasonable 
manner, together with incidental damages, less expenses saved in 
consequence of the lessee's default.  
    (3) If a lessee is otherwise in default under a lease 
contract, the lessor may exercise the rights and pursue the 
remedies provided in the lease agreement and this article., 
which may include a right to cancel the lease.  In addition, 
unless otherwise provided in the lease contract:  
    (a) if the default substantially impairs the value of the 
lease contract to the lessor, the lessor may exercise the rights 
and pursue the remedies provided in subsection (1) or (2); or 
    (b) if the default does not substantially impair the value 
of the lease contract to the lessor, the lessor may recover as 
provided in subsection (2). 
    Sec. 18.  Minnesota Statutes 1990, section 336.2A-525, is 
amended to read: 
    336.2A-525 [LESSOR'S RIGHT TO POSSESSION OF GOODS.] 
    (1) If a lessor discovers the lessee to be insolvent, the 
lessor may refuse to deliver the goods.  
    (2) The lessor has on After a default by the lessee under 
the lease contract of the type described in section 
336.2A-523(1) or 336.2A-523(3)(a) or, if agreed, after other 
default by the lessee, the lessor has the right to take 
possession of the goods.  If the lease contract so provides, the 
lessor may require the lessee to assemble the goods and make 
them available to the lessor at a place to be designated by the 
lessor which is reasonably convenient to both parties.  Without 
removal, the lessor may render unusable any goods employed in 
trade or business, and may dispose of goods on the lessee's 
premises (section 336.2A-527).  
    (3) The lessor may proceed under subsection (2) without 
judicial process if that it can be done without breach of the 
peace or the lessor may proceed by action. 
    Sec. 19.  Minnesota Statutes 1990, section 336.2A-527, is 
amended to read: 
    336.2A-527 [LESSOR'S RIGHTS TO DISPOSE OF GOODS.] 
    (1) After a default by a lessee under the lease contract 
(of the type described in section 336.2A-523(1)) or 
336.2A-523(3)(a) or after the lessor refuses to deliver or takes 
possession of goods (section 336.2A-525 or 336.2A-526), or, if 
agreed, after other default by a lessee, the lessor may dispose 
of the goods concerned or the undelivered balance by lease, 
sale, or otherwise.  
    (2) Except as otherwise provided with respect to damages 
liquidated in the lease agreement (section 336.2A-504) or 
otherwise determined by pursuant to agreement of the parties ( 
section sections 336.1-102(3) and 336.2A-503), if the 
disposition is by lease agreement substantially similar to the 
original lease agreement and the new lease agreement is made in 
good faith and in a commercially reasonable manner, the lessor 
may recover from the lessee as damages (a) (i) accrued and 
unpaid rent as of the date of the start of the term of the new 
lease agreement, (b) (ii) the present value, as of the same date 
of the start of the term of the new lease agreement, of 
the difference between the total rent for the then remaining 
lease term of the original lease agreement and the total rent 
for the lease term minus the present value, as of the same date, 
of the rent under the new lease agreement applicable to that 
period of the new lease term that is comparable to the then 
remaining term of the original lease agreement, and (c) (iii) 
any incidental damages allowed under section 336.2A-530, less 
expenses saved in consequence of the lessee's default. 
    (3) If the lessor's disposition is by lease agreement that 
for any reason does not qualify for treatment under subsection 
(2), or is by sale or otherwise, the lessor may recover from the 
lessee as if the lessor had elected not to dispose of the goods 
and section 336.2A-528 governs. 
    (4) A subsequent buyer or lessee who buys or leases from 
the lessor in good faith for value as a result of a disposition 
under this section takes the goods free of the original lease 
contract and any rights of the original lessee even though the 
lessor fails to comply with one or more of the requirements of 
this article. 
    (5) The lessor is not accountable to the lessee for any 
profit made on any disposition.  A lessee who has rightfully 
rejected or justifiably revoked acceptance shall account to the 
lessor for any excess over the amount of the lessee's security 
interest (section 336.2A-508(5)). 
    Sec. 20.  Minnesota Statutes 1990, section 336.2A-528, is 
amended to read: 
    336.2A-528 [LESSOR'S DAMAGES FOR NONACCEPTANCE OR, FAILURE 
TO PAY, REPUDIATION, OR OTHER DEFAULT.] 
    (1) Except as otherwise provided with respect to damages 
liquidated in the lease agreement (section 336.2A-504) or 
otherwise determined by pursuant to agreement of the parties 
(section sections 336.1-102(3) and 336.2A-503), if a lessor 
elects to retain the goods or a lessor elects to dispose of the 
goods and the disposition is by lease agreement that for any 
reason does not qualify for treatment under section 
336.2A-527(2), or is by sale or otherwise, the lessor may 
recover from the lessee as damages for nonacceptance or 
repudiation by a default of the type described in section 
336.2A-523(1) or 336.2A-523(3)(a), or, if agreed, for other 
default of the lessee (a), (i) accrued and unpaid rent as of the 
date the lessor obtained possession of the goods or an earlier 
date when the lessee made an effective tender of possession of 
the goods back to the lessor of default if the lessee has never 
taken possession of the goods, or, if the lessee has taken 
possession of the goods, as of the date the lessor repossesses 
the goods or an earlier date on which the lessee makes a tender 
of the goods to the lessor, (b) (ii) the present value as of the 
date determined under paragraph (a) clause (i) of the difference 
between the total rent for the then remaining lease term of the 
original lease agreement and minus the present value as of the 
same date of the market rent at the time determined under 
paragraph (a), and place for tender where the goods are located 
computed for the same lease term, and (c) (iii) any incidental 
damages allowed under section 336.2A-530, less expenses saved in 
consequence of the lessee's default. 
    (2) If the measure of damages provided in subsection (1) is 
inadequate to put a lessor in as good a position as performance 
would have, the measure of damages is the present value of the 
profit, including reasonable overhead, the lessor would have 
made from full performance by the lessee, together with any 
incidental damages allowed under section 336.2A-530, due 
allowance for costs reasonably incurred and due credit for 
payments or proceeds of disposition. 
    Sec. 21.  Minnesota Statutes 1990, section 336.2A-529, is 
amended to read: 
    336.2A-529 [LESSOR'S ACTION FOR THE RENT.] 
    (1) After default by the lessee under the lease contract 
(of the type described in section 336.2A-523(1)) or 
336.2A-523(3)(a) or, if agreed, after other default by the 
lessee, if the lessor complies with subsection (2), the lessor 
may recover from the lessee as damages:  
    (a) for goods accepted by the lessee and not repossessed by 
or tendered to the lessor, and for conforming goods lost or 
damaged within a commercially reasonable time after risk of loss 
passes to the lessee (section 336.2A-219), (i) accrued and 
unpaid rent as of the date of entry of judgment in favor of the 
lessor, (ii) the present value as of the same date of entry of 
judgment in favor of the lessor of the rent for the then 
remaining lease term of the lease agreement, and (iii) any 
incidental damages allowed under section 336.2A-530, less 
expenses saved in consequence of the lessee's default; and 
    (b) for goods identified to the lease contract if the 
lessor is unable after reasonable effort to dispose of them at a 
reasonable price or the circumstances reasonably indicate that 
effort will be unavailing, (i) accrued and unpaid rent as of the 
date of entry of judgment in favor of the lessor, (ii) the 
present value as of the same date of entry of judgment in favor 
of the lessor of the rent for the then remaining lease term of 
the lease agreement, and (iii) any incidental damages allowed 
under section 336.2A-530, less expenses saved in consequence of 
the lessee's default. 
    (2) Except as provided in subsection (3), the lessor shall 
hold for the lessee for the remaining lease term of the lease 
agreement any goods that have been identified to the lease 
contract and are in the lessor's control. 
    (3) The lessor may dispose of the goods at any time before 
collection of the judgment for damages obtained pursuant to 
subsection (1).  If the disposition is before the end of the 
remaining lease term of the lease agreement, the lessor's 
recovery against the lessee for damages will be is governed by 
section 336.2A-527 or 336.2A-528, and the lessor will cause an 
appropriate credit to be provided against a judgment for damages 
to the extent that the amount of the judgment exceeds the 
recovery available pursuant to section 336.2A-527 or 336.2A-528. 
    (4) Payment of the judgment for damages obtained pursuant 
to subsection (1) entitles the lessee to use and possession of 
the goods not then disposed of for the remaining lease term of 
and in accordance with the lease agreement.  
    (5) After a lessee has wrongfully rejected or revoked 
acceptance of goods, has failed to pay rent then due, or has 
repudiated (section 336.2A-402), a lessor who is held not 
entitled to rent under this section must nevertheless be awarded 
damages for nonacceptance under sections 336.2A-527 and 
336.2A-528. 
    In addition to any other recovery permitted by this article 
or other law, the lessor may recover from the lessee an amount 
that will fully compensate the lessor for any loss of or damage 
to the lessor's residual interest in the goods caused by the 
default of the lessee. 

                                ARTICLE 2

                         UNIFORM COMMERCIAL CODE

                         ARTICLE 6 - BULK SALES
    Section 1.  Minnesota Statutes 1990, section 336.1-105, is 
amended to read: 
    336.1-105 [TERRITORIAL APPLICATION OF THE CHAPTER; PARTIES' 
POWER TO CHOOSE APPLICABLE LAW.] 
    (1) Except as provided hereafter in this section, when a 
transaction bears a reasonable relation to this state and also 
to another state or nation the parties may agree that the law 
either of this state or of such other state or nation shall 
govern their rights and duties.  Failing such agreement this 
chapter applies to transactions bearing an appropriate relation 
to this state. 
    (2) Where one of the following provisions of this chapter 
specifies the applicable law, that provision governs and a 
contrary agreement is effective only to the extent permitted by 
the law (including the conflict of laws rules) so specified: 
    Rights of creditors against sold goods.  Section 336.2-402. 
    Applicability of the article on leases.  Sections 
336.2A-105 and 336.2A-106.  
    Applicability of the article on bank deposits and 
collections.  Section 336.4-102. 
    Governing law in the article on funds transfers.  Section 
336.4A-507. 
    Bulk transfers subject to the article on bulk transfers. 
Section 336.6-102. 
    Applicability of the article on investment securities. 
Section 336.8-106. 
    Perfection provisions of the article on secured 
transactions.  Section 336.9-103. 
    Sec. 2.  Minnesota Statutes 1990, section 336.2-403, is 
amended to read: 
    336.2-403 [POWER TO TRANSFER; GOOD FAITH PURCHASE OF GOODS; 
"ENTRUSTING".] 
    (1) A purchaser of goods acquires all title which the 
purchaser's transferor had or had power to transfer except that 
a purchaser of a limited interest acquires rights only to the 
extent of the interest purchased.  A person with voidable title 
has power to transfer a good title to a good faith purchaser for 
value.  When goods have been delivered under a transaction of 
purchase the purchaser has such power even though 
    (a) the transferor was deceived as to the identity of the 
purchaser, or 
    (b) the delivery was in exchange for a check which is later 
dishonored, or 
    (c) it was agreed that the transaction was to be a "cash 
sale," or 
    (d) the delivery was procured through fraud punishable as 
larcenous under the criminal law.  
    (2) Any entrusting of possession of goods to a merchant who 
deals in goods of that kind gives the merchant power to transfer 
all rights of the entruster to a buyer in ordinary course of 
business.  
    (3) "Entrusting" includes any delivery and any acquiescence 
in retention of possession regardless of any condition expressed 
between the parties to the delivery or acquiescence and 
regardless of whether the procurement of the entrusting or the 
possessor's disposition of the goods have been such as to be 
larcenous under the criminal law.  
    (4) The rights of other purchasers of goods and of lien 
creditors are governed by the articles on secured transactions 
(article 9), bulk transfers (article 6) and documents of title 
(article 7).  
    Sec. 3.  [SAVINGS CLAUSE.] 
    Rights and obligations that arose under sections 336.6-101 
to 336.6-111 and 336.9-111 before their repeal remain valid and 
may be enforced as though they had not been repealed.  
    Sec. 4.  [REPEALER.] 
    Minnesota Statutes 1990, sections 336.6-101; 336.6-102; 
336.6-103; 336.6-104; 336.6-105; 336.6-106; 336.6-107; 
336.6-108; 336.6-109; 336.6-110; 336.6-111; and 336.9-111, are 
repealed. 
    Presented to the governor May 21, 1991 
    Signed by the governor May 24, 1991, 4:50 p.m.